Can Pension Systems Cope? Population Ageing and Retirement Income Provision in the European Union

Citation

Thelma Wilson, C. (1998), "Can Pension Systems Cope? Population Ageing and Retirement Income Provision in the European Union", European Business Review, Vol. 98 No. 5, pp. 294-294. https://doi.org/10.1108/ebr.1998.98.5.294.5

This is a fascinating book‐booklet, which holds the attention of the reader throughout. It is written in good English without much jargon and is a practical text. The introduction and demographic trends set the stage for the information developed thereafter. The populations of the 15 countries of the European Union are ageing ‐ not all at the same rate ‐ as the result of a decline in their birth rate, an increase in life expectancy and limited migration.

Many of the countries in the EU have social security systems that are based on the employed public contributing a proportion of their income weekly or monthly. It would have been helpful for the sake of comparison if Davis had given both the percentage of income currently contributed and that percentage he considered might have to be made in the future.

The question of what the Government does with the contributions is obviously of vital importance; in most countries there is a pay‐as‐you‐go system where the contributions are used to meet the payments of today’s pensioners. Few countries have been able to maintain an even partially funded system but Davis stresses that it is through the use of a funded system that pensions will be safeguarded in the future. There are some countries that have a well developed private pension fund industry which is funded and he suggests that the future is brighter for them.

In order to main the contributions from the populace it is necessary for them to be employed and Davis draws attention to the rates of unemployment and of early retirement across Europe.

These patterns, he says, must change.

Davis tells us that the position will become more acute after 2010 and that we must use the intervening time to remedy our systems. He suggests that we think of the possibility of raising the retirement age and of encouraging work after retirement. Meanwhile those in employment are to pay for those who are already retired and in addition make payments for their own retirement.